Chamberlain Enterprises, Inc. reported the following receivables in its December 31, 2020, year-end balance sheet: Current assets:
Accounts receivable, net of $24,000 in allowance for
uncollectible accounts $218,000
Interest receivable 6,800
Notes receivable 260,000
Additional information:
1. The notes receivable account consists of two notes, a $120,000 note and a $200,000 note. The $120,000 note is dated October 31, 2020, with principal and interest payable on October 31, 2021. The $200,000 note is dated March 31, 2020, with principal and 8% interest payable on March 31, 2021.
2. During 2021, sales revenue totaled $2,020,000, $1,880,000 cash was collected from customers, and $31,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end gross accounts receivable.
3. On March 31, 2021, the $200,000 note receivable was discounted at the Bank of Commerce. The bank’s discount rate is 8%. Chamberlain accounts for the discounting as a sale.
Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Chamberlain’s 2021 income statement?
2. What amounts will appear in the 2021 year-end balance sheet for accounts receivable?
3. Calculate the receivables turnover ratio for 2021.